The present global economy is causing many investors to find ways of saving their money in a safer and more stable manner such as with a Roth IRA. A Roth is an appealing retirement planning vehicle for investors who realize the significance of an efficient retirement plan. A number of people considering diversification and protection of their retirement funds are opting to make investment in gold, though making such investment can be quite tricky.
This article is intended to assist you in arriving at the most excellent decision concerning your savings for future. Here, you’ll find some crucial information if you are considering making investment in gold, using a Roth.
Roth IRA Explained
Quite like its predecessor, the conventional IRA, a Roth is also a tax saving retirement scheme for individuals, but it has some major differences from the former.
For instance, contributions to conventional IRA are exempted from tax, but there is delayed taxation on growth, whereas in case of Roth IRA, the contributions you make are from the amount you get after having paid tax but the distributions you get from this account are not taxed. You are not permitted to subtract contributions made to a Roth while filing a tax return, though Roth distributions that you get after retirement are not taxed. You may continue making your contributions to a Roth even after you attain an age of seventy. Moreover, you need not make withdrawals after reaching a predefined age as is obligatory in case of a conventional IRA.
Roth IRA was initiated via the Taxpayer Relief Act of 1997. Though originally labeled as “IRA Plus,” it got named after Senator William Roth. A Roth is different from 401(k) but quite similar to conventional IRA in the sense that it is not sponsored by an employer, meaning that anybody can avail of it as long as they earn some wages. Unlike conventional IRA, there are restrictions on the maximum income of a Roth IRA holder. Till 2014, only those individuals having earnings up to and below $129,000 and couples with earnings lower than $191,000 get entitled to make contributions to a Roth.
Contributions that you can make to a Roth IRA are smaller, compared to the rest of retirement accounts. As on 2014, individuals below the age of fifty can make an annual contribution of only $5,500 to their Roth IRA whereas those above fifty years in age can make an additional contribution of $1,000 as a “catch-up provision.” Similar to other eligible plans, premature withdrawals attract a penalty of ten percent, whereas penalty for making excessive annual contribution is six percent.
Investment options for conventional as well Roth IRAs are likely to be far more, compared to accounts backed by employers, though the guardian of an IRA can restrict the kind of assets to be selected. A normal Roth IRA could not invest funds in physical asset such as precious metals and real estate.
Rules and Limitations of a Roth IRA Rollover
Investors are permitted to transfer or roll over their funds in Roth IRA between different financial organizations without inviting any tax penalties. However, the per annum number of transfers is restricted to one only. They are also permitted to utilize their existing funds in IRA for funding their self directed IRA.
You need to pay penalties for making withdrawals before you reach the age of retirement. Moreover, if you intend having a rollover, you are strongly suggested to decide on a direct rollover rather than an indirect one. The latter come with preserving requirements plus carry the threat of inviting penalties on account of premature withdrawals.
IRA-to-IRA transfers form the most widespread way of setting up self directed IRAs with funds fit for exiting. You can set up a fresh account with an IRA custodian that has the approval of IRS. On getting your consent, the custodian asks for transferring IRA funds from your present Roth IRA. Following this, the custodian is allowed to accept funds for investing the same as per your directives.
Roth IRA vs Traditional IRA vs Self Directed IRA vs Other Retirement Accounts
The table below is meant to help you assess the benefits of various retirement accounts along with respective tax advantages.
As a number of different kinds of retirement plans come with “Roth Options”, a Roth IRA would include the same advantages and drawbacks as conventional IRAs as far as the functioning of the table goes.
| Plan Type | Sponsorship | 2019 Contribution Limit | Roth Option? | Allow Gold Stocks? | Allow Gold ETFs? | Allow Gold Bullion |
|---|---|---|---|---|---|---|
| 401(k) | Private Employer | $19,000 / $25,000 | Yes | Maybe | Maybe | No |
| Solo 401(k) | Self-employed | $19,000 / $25,000 | Yes | Yes | Yes | Yes |
| Keogh Plan | Self-employed or Unincorporated Employer | $56,000 | No | Maybe | Maybe | No |
| 403(b) | Government or Non-profit Employer | $19,000 / $25,000 | Yes | Maybe | Maybe | No |
| 457(b) | Government or Tax-exempt Employer | $19,000 / $25,000 | Yes | Maybe | Maybe | No |
| SIMPLE IRA | Private Employer | $13,000 / $16,000 | Yes | Yes | Yes | Maybe |
| SEP IRA | Business Owners & Self-employed | $56,000 | Yes | Yes | Yes | Maybe |
| Profit Sharing Plan | Private Employer | $56,000 | No | Maybe | No | No |
| Money Purchase Plan | Private Employer | $56,000 | No | Maybe | Maybe | No |
| Annuity | Individual | None | No | Maybe | Maybe | No |
| ESOP | Private Employer | Varies | Yes | Maybe | No | No |
| SARSEP | Private Employer | $19,000 / $25,000 | No | Yes | Yes | Maybe |
| Traditional IRA | Individual | $6,000 / $7,500 | Yes | Yes | Yes | No |
| Precious Metals IRA | Individual | $6,000 / $7,500 | Yes | Yes | Yes | Yes |
| Thrift Savings Plan (TSP) | Government or Military | $19,000 / $25,000 | Yes | No | No | No |
Here is a table to compare different retirement accounts with tax-advantages. Since several different types of retirement accounts feature “Roth options” (Roth technically refers to the tax treatment, not the account type), a Roth IRA will have the same benefits and limitations as traditional IRAs for the purposes of this table.
| OUR RANK | COMPANY |  |  |  | FRAUD / LAWSUITS | TOTAL ANNUAL FEES | FULL REVIEW |
|---|---|---|---|---|---|---|---|
1 | NIL | $0 - $340 per year scaled | |||||
| 2 | NIL | $250 per year flat-rate | |||||
| 3 | NIL | $200 per year Choice* | |||||
| 4 | $360+ per year (scaled) | ||||||
| 5 | NIL | N/A | |||||
| 6 | NIL | N/A | |||||
| 7 | NIL | $300 per year flat-rate | |||||
| 8 | NIL | $225 per year flat-rate | |||||
| 9 | NIL | $175 + per year (scaled) | |||||
| 10 | NIL | N/A |
Which Types of Gold Investing Can You Do in a Roth IRA?
Per the Rules and Limitations of a Roth IRA Rollover, a Roth IRA has plenty of investment options but can be limited by the IRA custodian and IRS rules.
These are the types of investments that a standard IRA owner should be able to invest in:
Individual stocks
Individual bonds (corporate and government)
Options
Mutual fund shares
Exchange Traded Fund (ETF) shares
Certificates of Deposit (CDs)
Money Market Fund shares
In short, this means that you cannot invest in physical gold bullion (or any other approved investment metal) through a standard Roth IRA. The simplest way to invest in gold through your IRA is to purchase stocks in gold mining companies or to purchase a mutual fund that includes mining company stocks. This strategy is referred to as buying “paper gold.” There are also gold ETFs (GLD) and mining ETFs which provide indirect access to gold investing.
Choosing a Gold IRA Company for your Roth IRA Rollover into a Self Directed Gold IRA
Our visitors often ask us about which companies we recommend for Precious Metals IRA rollovers and bullion purchases.
Since we are an independent website, and none of us work with or have any shares of any gold IRA company, we are able to conduct impartial reviews of our 10 best companies. These reviews are based on existing customer feedback and ratings from authority review bureaus such as the Better Business Bureau (BBB), the Business Consumer Alliance (BCA), and TrustLink.
Here are some company reviews we conducted in 2015 to help you make a decision: (we encourage you to do your own diligence and call multiple companies).
| OUR RANK | COMPANY | | | | FRAUD / LAWSUITS | TOTAL ANNUAL FEES | FULL REVIEW |
|---|---|---|---|---|---|---|---|
1 | NIL | $0 - $340 per year scaled | |||||
| 2 | NIL | $250 per year flat-rate | |||||
| 3 | NIL | $200 per year Choice* | |||||
| 4 | $360+ per year (scaled) | ||||||
| 5 | NIL | N/A | |||||
| 6 | NIL | N/A | |||||
| 7 | NIL | $300 per year flat-rate | |||||
| 8 | NIL | $225 per year flat-rate | |||||
| 9 | NIL | $175 + per year (scaled) | |||||
| 10 | NIL | N/A |
